Halwell Motor Company acquires all of the stock of Ornex Auto Services for $60,000,000 in cash. The books of Ornex report the following account balances at the date of acquisition (in trial balance format). Date-of-acquisition fair values are also
displayed.
Current assets
Property, net
Liabilities
Capital stock
Retained earnings
Total
Book Value Dr (Cr)
$1,000,000
59,000,000
(35,000,000)
(10,000,000)
(15,000,000)
Fair Value
Dr (Cr)
$650,000
40,000.000
$(36,000,000)
Ornex has no previously unrecorded identifiable intangibles.
On the consolidation working paper, eliminating entry (R)
Select one:
a debits goodw by $55,350,000
b. credits Investment in Ornex by $25,000,000
c. debits capital stock by $10,000,000
d. debits current assets by $350,000
